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Scott Adams, scribe of the popular Dilbert comic, may be on to something with his “economics party”. I’ve been intrigued by economics for the past year or two and I often wonder why our government decides to ignore economists. These guys study markets and how they interact - they can typically tell us if a spending decision will provide the expected results or if it will flop. Politicians rarely pay attention to these “intellectuals” because well, what the hell do they know?

Heck, I’m all in for this one - are you?

I read an interesting post at Freakonomics where they discussed who was paying a higher percentage of total income in taxes - the super rich or those who aren’t as fortunate. It appears, through a straw poll of sorts, that the top 10% of wage earners who are said to earn 50% of the total income pay less than their receptionists. Warren Buffett has actually posted a challenge with a prize of 1 million bucks (chump change for him I’m sure) to all of the people on the Forbes top 400 list to find someone whose receptionist pays a lower percentage of income in taxes - so far - there have been no challengers.

Read on!

In an influential 1932 essay, Lionel Robbins defined economics as “the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” (from Wikipedia)

I read a fascinating article about our current economic “woes” and it turns out fear is more of a factor than short supply. Simply because we desire them more they become more “scarce” causing the price to rise exponentially.

Congress and the White House have tried to help out our economy by giving creating an economic stimulus package that should hit most of our bank accounts within the next week. This was hardly the correct solution as our problems were created, in part at least,.by an economy that went from a traditional supply and demand model to one of scarcity. There has been quite a bit of fighting between the parties and the branches in an attempt to play the blame game. This year is charged with politics and I can see both sides using any fodder available to put their party into a more favorable light.

Gas prices have risen greatly in the past year because we have placed an increasing amount of desire for the fuel to keep our lives normal. We have placed a priority on fuel and as such we’ve seen the prices rise through the roof. Supply has dropped by a small amount but speculation has lead to dramatic price increases. I wrote about somebody talking about the futures market a few months ago talking about the rising price of oil - he couldn’t see the logic in the market. I don’t think there was any logic - we’re seeing a market that is being driven by fear. Fear is anything but rational. It is a reactionary impulse that causes us to hoard and make quick judgments. We fail to completely think through the problem.

The media fails to help our situation as they feed us with line after line of diatribe causing us to grow increasingly more paranoid about the situation. Its a shame that there little wrong to begin with. A state news organization is not the correct direction to head but we should ask more from the media. Sure, they’re in a business and they’re going to try and drive a profitable and addictive story that will keep readers and listeners coming back, but, they’ve got to show a little more responsibility.

Yes, there are more factors involved than a scarcity economy and yes - this is part socialism and economics but its probably the root of current ill. It’s a shame there isn’t much we can do about it.

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If you’ve been paying attention - we’re paying more for many of the things that we use daily. The rising cost of oil impacts the cost of transportation, consumer goods, and food. Companies are trying to cut costs wherever possible while trying to retain the most talented and hardworking individuals. Some would blame the war for our economy that is in a downturn. Everything is linked - I read a few articles and found myself hitting CTRL-B five times and I thought it was worth sharing. Each is tied to the other; lets hope that I can explain what I mean.

According to recent polls many Americans have stated that they have felt that it has been much harder to “get ahead.” Our standards of “ahead” have changed since the days when my father was growing up in the 60’s. I’m going to guess that getting an education, having shelter, a good family life, and something (anything except mustard greens) to eat. Times were tough but if you were to persevere you could make a better life for the next generation and hopefully yourself in the process. Now we demand consumer goods as a measure of how well we are doing. Measures of American success include an car (or two), a house, high speed internet, and cable TV. Without these things many believe that they are failing in the race to get ahead. We’re demanding more than ever while overlooking the basics. I’m going to go out on a limb but maybe we should be looking for a little less - check out the full text at the Washington Post.

Some who claim they are having trouble would point the finger at the ever rising costs of the wars in Iraq and Afghanistan and the increasing price of gasoline. While the cost of the war far exceeds most if not all of the original estimates we’ve paid for most of it with credit. Its been added to our national debt and will probably remain for years to come - the price of oil is increasing rapidly due to increased consumption in America and in south east Asia in places like China and India. Companies outside of OPEC control have made few if any significant discoveries in recent years. It takes a considerable amount of time to find a sizable cache of carbon deposits, negotiate drilling rights, and remove them for refining and delivery. Simply put, even if there are reserves available we may not find them before demand outstrips supply. We have plenty of oil to last for the next 20 years but there has been rampant speculation of what will happen if consumption continues to increase at the current rates. If we cannot find additional reserves we might have a problem - we might find ourselves in a global energy crisis. (I hate the word crisis because I feel as if I am on a cable news network where EVERYTHING is a crisis). The futures market has seen this and that is why we are experiencing the recent increase in oil prices - sure - they could have seen this years ago but its happening now. I wonder if they took off their rose colored glasses at some point in the last two years and saw the error of their ways - the end result of their revelation is that we’re paying for it.

We can do our part to consume less but its going to take a concentrated effort. If we were to determine car insurance premiums based upon the number of miles that we drive we could leverage our savings against those who drive everywhere. They would be forced to consume less simply because they would be unable to afford all of the driving. Enacting immediate changes in MPG requirements and subsidizing companies that reduce consumption while taxing those that use heavily could help. The economic impact of such a decision can hardly be measured by me, but, it’s on the table.

Everything is tied together - change is going to impact our ability to “get by” and may impact our quality of life. We cannot continue to increase consumption at current rates or we are going to see a bubble - a big bubble - and only the those with the most resources in the end will be able to survive.

First off, I am an undecided voter who is unsure as to what party or candidate that he will be voting for in the general election in November. I am worried about our country as a whole and I am particularly worried about our the education of Americans and our job market. I’ve been reading economic books as a hobby for a while - I am no expert by any means but I’ve got a firm grasp of the principles. Barrack Obama gave a speech today at a General Motors factory and talked about jobs and education. Needless to say, I was intrigued by what he said because I consider him a front runner. So, I checked out his website and found the following excerpts.

Trade that Works for Workers – Obama will end tax breaks for companies who ship jobs overseas and give breaks to companies who create good jobs with decent wages here in America.

Millions of New Green Jobs — Obama’s energy plan will invest $150 billion over ten years to establish a green energy sector that will create millions of new jobs over the next two decades – jobs that pay well and can’t be outsourced. He will also provide funding to help manufacturers convert to green technology and help workers learn the skills they need for these jobs.

Ok, Mr. Obama is planning on stopping tax breaks to companies that outsource employees from other nations. In the classical view of economics if you are unable to compete in a market and another company or location can do it better you should let them. Prime examples of countries that do much of the work we used to do in house are China and India. We have moved a large number of technical and non-technical jobs to these companies because they can often do our work for pennies on the dollar. When a company moves jobs out of the country we need to react accordingly to create new jobs left in the vacuum. Occasionally, we must move vertically instead of horizontally in our job choice. Instead of moving to the same job we had before we might need to increase our skill set or education level. Obama plans to help people move vertically with training required to create and obtain “green” jobs. What I don’t understand is why he is planning on penalizing companies that outsource jobs - other markets that can do the job better should do the job. It is in the best interest of the consumer if a product is produced by the cheapest and most efficient manufacturer at all levels. Yes, the unskilled labor will face a crunch at the on set of such a change but if he moves vertically he will be able to get a product at a cheaper price than when he was making it.

Below is an excerpt from a speech he gave today -

I believe that we can create millions of those jobs around a clean, renewable energy future. A few hours northeast of here is the city of Manitowoc [MAN-a-ta-WOC]. For over a century, it was the home of Mirro manufacturing – a company that provided thousands of jobs and plenty of business. In 2003, Mirro closed its doors for good after losing thousands of jobs to Mexico.

But in the last few years, something extraordinary has happened. Thanks to the leadership of Governor Doyle and Mayor Kevin Crawford, Manitowoc has re-trained its workers and attracted new businesses and new jobs. Orion Energy Systems works with companies to reduce their electricity use and carbon emissions. And Tower Tech is now making wind turbines that are being sold all over the world. Hundreds of people have found new work, and unemployment has been cut in half.

Here he is talking about people that moved vertically - this is exactly what we should do in every situation. We should stop trying to prevent outsourcing - even though there is some short term pain it is in the best interest of all to do so. From what I’ve read on his website it almost seems like he is contradicting himself. I’m not quite sure if two separate people are writing his speeches and press releases but it doesn’t make much sense to me at the moment.

I want to get McCain’s take on the whole thing - but, his website is down at the moment - well, I can’t get to it on a govt. computer at the moment - so his website could be working without a hitch.

I read an extremely interesting article (found at the NY Times) about our nation and its future. The geopolitical landscape is constantly changing and this author believes that we, the United States, are on the verge of no longer being a prime superpower. Competition from the EU and China is going to be fierce and we must change a number of things to reassert ourselves and turn our nation around. We may have to change our thinking but change can be good - it’s lengthy but well worth the read. (somebody out there can buy me his book if they really want - I’d love to read it)